Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
986268 | Review of Development Finance | 2014 | 9 Pages |
Abstract
For two decades now, many banks in Africa have been holding large amounts of liquid assets. Prevailing explanations of this phenomenon rely on credit rationing models. Yet, while modern models of financial intermediation show that high exposure to liquidity risk may prompt banks to hoard large amounts of (precautionary) liquid reserves, this hypothesis has often been overlooked. We try to fill the gap in this paper. More specifically, we hypothesize and confirm that bank liquidity hoarding in Africa reflects, at least partially, a precautionary strategy to guard against the risks associated with liquidity services to depositors.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
P.V. Nketcha Nana, Lucie Samson,